Renovations for Rental Property
Our Rental Ready program is value driven, bringing higher rent, better tenants, and less maintenance headaches!
In order to create a successful investment property, the two most important factors are (1) pre qualifying your tenant and (2) properly renovating your investment property. We have witnessed this to be true through our diverse client base, many of whom are professional investors who purchase rental properties at a massive scale and are focused on managing their investments. These clients consistently invest in renovations up front when they purchase the property. Conversely, we have several clients who took the opposite approach by minimizing their up front investment and completing only the minimum renovation. Ten years later these clients are now bringing their rentals up to speed with value added renovations because they have learned the value of this investment.
Why Renovating a Rental Unit Makes Sense
- Higher Rent: A home that typically rents for $1,500/month can easily generate another $100-$200 more per month in gross revenue if properly renovated. Things such as an upgraded kitchen, uniform flooring, paint, and a fenced yard make a big difference.
- Competition: After the 2006 recession, a lot of professional investors moved into the landlord business and they represent your competition. If you want the top tenants, your home needs to represent the same quality as the competition. Tenants are smart and they remember the negative experience they had with the landlord who wasn’t willing to invest in their property. Good tenants demand qualify homes.
- Turn Over: Imagine a balmy summer day and a tenant returns home from work to find that their 15 year old air conditioning went out again. The landlord sends a technician to fix the unit and finds it needs to be replaced. Three quotes and 6 days later, the landlord replaces the air conditioning. The tenant is going to remember the 6 days and 5 nights living in abhorrent conditions. Losing a tenant is the hidden cost of not keeping up with your property. It’s not unusual to have a quality tenant stay 4 to 5 years in a nice home!
- Maintenance: Your property manager will thank you for investing in your home. Furthermore, a service call to a property is much more expensive than a repair completed on the “turn” when you are preparing a home between tenants. A lot of little service calls equal a big expense against your bottom line. You should choose a contractor who understands the value of preventative maintenance, such as changing out the guts of a toilet to avoid future leaks.
Pro-tip: You want to avoid “Over Renovating” your Property”. Instead of renovating the entire home as you would do if you were going to live there, you should focus entirely on what will bring you the best return on investment (ROI).
What types of renovations add the most value to your rental? Here are some of our main areas that we recommend updating that will actually help bring the rental rate up as well as the value of your home.
- Curb Appeal (Paint, Landscaping)
- Fenced back yard (According to www.realpropertymgt.com and www.avma.org , 50% of renters have pets and 35% without pets said that they would have pets if allowed by landlords).
Here is a case study example of one of the renovations completed by LP Design and Renovation, which generated and increase in monthly rent from $1,295 to $1,575. That’s $280 per month and $3,360 per year! We have in-house analysts who can assess the rent potential of your investment property so you can calculate the ROI of your renovations before you spend the money to do them.
- Previous Rent: $1,295
- Rehab Cost: $18,820
- New Rent Value: $1,575
- Additional Profit: $3,360
- ROI: 17.85%
Renovation consisted of a full interior and exterior paint. We painted the kitchen cabinets and added new faucets and also new lighting. In the bathrooms we installed new vanities, re-glazed the shower, added new lights and hardware. We also upgraded the flooring with new laminated floors which is durable, attractive, and saves money by avoiding the carpet. Here are some before and after photos.
If you’re planning a home remodel or renovation in the Orlando or surrounding Central Florida area, give our LP Design and Renovation team a call at (407) 901-6215 or send us an email through our secure online contact form at https://lpinspiredrenovations.com/contact/. We’ll help you to visualize the outcome and provide you with a plan that is based on your budget.